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School Bond Qualification & Loan

School Bond Qualification and Loan Program

The School Bond Qualification and Loan program was established by the Michigan Constitution of 1963 and amended by Public Act 92 of 2005 to provide a state credit enhancement and loan mechanism for school district bond issues. The bonds must be qualified by the State Treasurer and the bond proceeds must be used for capital expenditure purposes.

Preliminary Qualification

Preliminary Qualification

A school district that seeks State qualification of its bond issue is required to file a preliminary qualification (PQ) application. The PQ application is the mechanism to seek preliminary qualification. Prior to completing the PQ application, a district should conduct a thorough study to determine facility needs and gauge the level of support that exists within the community.

School Loan Revolving Fund

The School Loan Revolving Fund (SLRF) is a self-sustaining fund that makes loans to school districts to assist with making debt service payments on state qualified bonds issued under the School Bond Qualification and Loan Program. Any money repaid by school districts on loans made by the SLRF are deposited back into the fund for future use.

In order to borrow from the state for debt service needs the district must:

Have the bond issue qualified.

Levy a minimum of 7 debt mills.

School Loan Revolving Fund participants must submit a board authorized application due annually every August 1.

Program Requirements

Program Requirements

When a school district intends to borrow from the SLRF, it is important to understand the ongoing annual administrative effort that will be required for obtaining disbursements and accounting for borrowing and repayments until the debt is repaid.

Borrowing for Debt Service

Borrowing for Debt Service

A district may request a loan from the state for the additional portion of the funds required to make full debt service payment rather than increase its current debt millage. Funds are disbursed to the district before the May and November debt service payments.